Magazine article Marketing

Grinding It Out

Magazine article Marketing

Grinding It Out

Article excerpt

A tough battle looms as Kenco takes on Starbucks with a premium instant coffee.

When news of Starbucks' plans to launch an instant coffee emerged last year, the development was greeted with bemusement and, in some cases, horror.

Commentators questioned the impact the launch could have on the brand of the world's biggest coffee-shop chain, which prides itself on fresh coffee. Doomsayers predicted that associating Starbucks with an instant product, which is viewed as inferior to fresh coffee, could have a detrimental effect.

While the long-term effects of the initiative are unknown, in the short term, it is hard to view the roll-out of Starbucks Via Ready Brew as anything other than a success. Since its launch in March, Via has racked up dollars 100m in global sales.

Starbucks' UK store sales from July to September were 6% up on last year. The rise was partially attributed to Via, which sold more than 9m servings in the first six months. While the product was initially sold only in Starbucks outlets, it is now available in major supermarkets, as well as from selected airlines and rail companies.

Entering the fray

However, early next year, Starbucks will be forced into battle against coffee giant Kraft Foods which, as Marketing exclusively revealed last week, is drawing up plans to muscle in on the premium instant-coffee market.

It is understood that the product, Kenco Millicano Wholebean Instant, will be sold in a silver tube to imply premium associations, when it reaches supermarket shelves from March.

The launch may even be the reason for Starbucks' announcement earlier this year that it was ending a 12-year global distribution deal with Kraft.

A Kraft spokeswoman says that with Millicano the company is aiming to 'attract a wide range of instant-coffee drinkers who are looking for a better-quality coffee'.

'As a premium-coffee brand, Kenco Coffee has always been focused on providing high-quality products to UK coffee lovers and innovating to address different market opportunities,' she adds. She would not be drawn, though, on whether the concept was inspired by Via.

Richard Tolley, interim marketing director of hot-beverage specialist Bettys & Taylors of Harrogate, says Starbucks' move has set the bar for others to reach.

'It's no longer companies such as Kraft and Nestle (the owner of Nescafe) that are setting the NPD agenda. …

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